You’re probably familiar with the “war for talent” concept. Because of the shortage of skills that businesses are currently facing and employees’ changing expectations—more than ever taken into account is the company’s mission, values, and the development opportunities offered over benefits packages—it becomes more challenging for businesses to recruit and retain top talent.
According to new research of more than 600 U.S. businesses with 50 to 500 employees, 63.3% of companies say retaining employees is more challenging than hiring them. Today, more than a third of workers are searching actively or casually for a job. Over my career working with companies across a wide range of industries, I have learned that company culture is the key to unlocking employee engagement, improving top and bottom lines, and increasing customer satisfaction. It turns out that the soft concept of culture is the most effective path to hard-earned dollars.
Emotions Are the Key to Employee Engagement
If you want to stay on top of your game and win the war for talent, you’ll need to develop an effective employee engagement strategy. Even though your employees might be happy with the employee benefits or work environment, that doesn’t necessarily translate to the type of engagement that keeps them around.
Employee engagement is the emotional commitment the employee has to the organization. When employees feel engaged, they care about the company and do their best work to achieve the company’s goals, and their primary objective is to contribute to the company’s success. Employee engagement is not about employee benefits or bonuses; it’s about the feeling of being part of something larger than themselves—a successful business and team.
Read more of Kurt Daradics’ thought leadership.
Good Company Culture Increases Revenue by 4x
According to a long-term study, companies with the best corporate cultures encouraged initiatives that drive all-around leadership by the individual employees. They also grew 682% in revenue. During the same evaluation period—11 years—companies without a thriving culture grew only 166% in revenue. A healthy company culture generates more than four times higher revenue growth!
A company that routinely recognizes and rewards its employees is more likely to see increased accountability, responsibility, and leadership initiatives.
It also results in higher profitability. According to Gallup’s meta-analysis, the businesses or groups that scored the highest on employee engagement showed 21% higher profitability levels than groups in the lowest quartile. Companies with a highly engaged workforce also scored 17% higher on productivity.
Company culture and employee engagement are two sides of the same coin. A business committed to company culture will enjoy the benefits of increased revenue, increased productivity, and increased employee engagement.
A full 47% of people actively looking for a new job pinpoint company culture as the main reason for leaving their last job. If you’re going to improve employee retention and profitability, improving company culture should be one of your primary business priorities.
Learn more about Hunt Club’s approach to talent management.
Employee Engagement Depends on Empowering Leadership
Employee engagement isn’t just about soft, intangible, and feelings-based reviews about employee well-being. It’s about giving employees responsibilities and a sense of real ownership and belonging in the process. Since employee engagement has a material impact on business success it should be considered as table stakes in the business strategy.
Successful organizations focus on employee engagement by ensuring that all employees have the best knowledge and tools available to perform their jobs as well as possible. The Japanese concept of kaizen (incremental daily growth quickly compounds) helps allow room for mistakes as part of the productive iterative process to improve and scale processes.
Managers in successful organizations make sure employees are clear with their expectations and support their employees’ professional development. Effective communication leads to more productive employees and, through this, to a more profitable organization. However, we’re not there yet: A recent Interact/Harris Poll shows that 91% of the surveyed employees think their leaders lack communication skills.
Curiosity, active listening and empathy by leaders are the antidote to apathy and employee disengagement. “Seek first to understand, then be understood” is the fifth principal in Stephen Covey’s seminal book The 7 Habits of Highly Effective People, and a timely reminder to leaders who want to spread productive culture. Unfortunately, too many leaders like to listen to themselves speak and are closed to feedback—which is a noted killer of company culture.
What’s more, almost 1 in 3 employees don’t trust their employers, according to the Edelman Trust Barometer. That’s an alarming and timely insight into the crisis of culture that the majority of businesses are facing. It also explains why employee retention is shrinking, as they are looking for greener pastures. The list of organizations that have renowned cultures (e.g., Patagonia, Salesforce, TOMS, Google, Zappos) is unfortunately much too short. But this provides an incredible opportunity for leaders willing to be different and walk the talk—customers and talent take notice and spread the good word.
Why Employee Engagement in the Workplace Matters
Engaged employees do their best work to achieve the business’ goals, and they are willing to go the extra mile to contribute to the business’ success. Employee engagement has become one of the top priorities for most businesses, and here’s why:
- Employee engagement increases productivity in the workplace. Engaged employees outperform their peers who are not engaged. Overall, companies with high employee engagement are 21% more profitable.
- Employee engagement improves morale in the workplace.
- Employee engagement reduces absenteeism. A Gallup study showed that highly engaged workplaces saw 41% lower absenteeism.
- Engaged employees provide better customer service.
- Low employee engagement is a costly problem. It costs businesses $4,129 on average to hire new talent, 42 days to fill a new role, and around $986 to onboard the new hire. That means you lose over $5,000 each time an employee walks out the door, not to mention the unquantifiable cost of losing an experienced employee, and the domino effect and contagion risks.
- It’s even worse elsewhere; while 33% of U.S. employees are engaged, according to Gallup’s State of the Global Workplace, only 15% of employees worldwide feel the same. That number drops to 10% in Western Europe and 8% in the U.K.
81% of Employees Are Considering Leaving Their Jobs
According to a 2017 study, 81% of employees would consider leaving their jobs for the right offer, even if they weren’t looking for a job at that moment. Changing jobs isn’t all about the money, either, as 74% of younger employees would accept a pay cut for a chance to work at their ideal job, and 23% of those seeking a job wouldn’t need a pay increase to take a new position. The Japanese concept of ikigai (the reason for being) provides a timeless blueprint for both employees and employers to find alignment around role fit.
To stay on the job, employees need to have relationships with other people in the workplace, and a work-life balance. Employees are more likely to look for another job if their co-workers are doing so as well, so companies should be careful of a domino effect spreading in the workforce.
Unlocking Engagement
One study asked the most important thing a manager or company could do to help the employee be successful, and 37%, a plurality, cited recognition as the most crucial method of support. Only 7% wanted more money and 4% a promotion. Over a third of the workforce want to be recognized first and foremost, leaving salary and job title lower down on the list.
A survey on rewarding and recognition highlights that 43% would rather receive credit privately with a manager, 10% would like to receive recognition publicly, and 9% would prefer recognition privately in writing. Taking employees for granted and giving them no recognition at all has proven to diminish the levels of employee engagement.
Instead, it helps when leaders make employees feel valued and heard. Recognition increases motivation, a sense of pride, and increased self-confidence at work. This recent report highlights that 84% of highly engaged employees attribute recognition as the primary factor for the last time they went above and beyond at work, compared to only 25% of actively disengaged employees.
A company that routinely recognizes and rewards its employees is more likely to see increased accountability, responsibility, and leadership initiatives.
Leading the Charge into the “Great Rehiring”
As we enter into an unprecedented “great rehiring” phase in 2021, it’s more important than ever to be a mission-driven organization that is nurturing and unleashing the unique creativity of each employee to work toward the organization’s mission. If the organization is not crystal clear on its mission, it will fail to focus and suffer from shiny-object syndrome, diffusing precious resources.
The best leaders know how to work their agenda through their lieutenants by providing guiding principles expressed through the organization’s values. These leaders lead from the front and set the example. It’s the promotion and repeated demonstration of sound values that create the conditions for the culture to thrive and companies to succeed. And this all happens one conversation and one mind at a time. The most effective leaders also realize that most people overestimate what can be done in one year (the battle), but underestimate what can be done in five years (the war).
These ideas, when implemented, will help you go the distance and win the war for talent because, in the end, teams with good chemistry—and engaged players—win.
